You can’t lie to people and steal from them just because you called it an ICO

US judge says securities law applies to ICO

The crypto market isn’t having a great day, especially Ethereum, which is down 7% to $182 after falling as low as $176. That’s a long way from $1400 back in January.

One of the reasons for the fall is that a New York judge ruled today that a case can go to trial on what sounds like a very obvious scam-coin. The defendant tried to argue that since what he was selling was a currency, not a security, that securities law doesn’t apply.

The judge didn’t pull any punches in his ruling:

“Per the
indictment, no diamonds or real estate, or any coins, tokens, or currency of
any imaginable sort, ever existed– despite promises made to investors to the
contrary,” District Judge Raymond Dearie said in his ruling. “Simply labeling an investment
opportunity as a ‘virtual currency’ or ‘cryptocurrency’ does not transform an
investment contract — a security — into a currency.”

I have a feeling that’s not the last time we’re going to be hearing that in the year ahead. ICOs raised about $18.7 billion this year and I’d wager than 90% of them are underwater.

Two things:

1) 2019 is going to be a banner year for securities lawyers in crypto

2) We’re going to be seeing a lot of these kinds of stories

ForexLive